What we verified in “Cash and your mortgage: how to use cash savings”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to the CFPB, cash to close is usually paid by cashier's check or wire transfer, and you will need to give your lender proof of the source of these funds.

   Sources 1 · Loan Estimate Explainer, 'Do you have enough cash on hand to pay your Estimated Cash to Close?': 'This payment is usually made by cashier's check or wire transfer'; 'You will need to provide your lender with proof of the source of these funds' · Checked October 17, 2026

2. The CFPB suggests having your two most recent bank statements and documentation of the source of your down payment ready: savings or investment statements showing at least two months of history and, if some of the money was a gift, a signed statement from the giver.

   Sources 2 · Create a loan application packet (last modified Dec. 12, 2024): 'Bank statements, two most recent'; 'Documentation of the source of your down payment'; 'showing at least two months' history of ownership'; 'get a signed statement from the giver stating that it was a gift' · Checked October 17, 2026

3. For Fannie Mae, the lender may verify your funds with copies of bank statements that identify the bank, you as the account holder, at least the last four digits of the account, the period, every deposit and withdrawal and the ending balance; on a purchase, the statements must cover the most recent full two-month period of activity.

   Sources 3 · Selling Guide B3-4.2-01, Verification of Deposits and Assets (05/04/2022): 'Copies of bank statements or investment portfolio statements'; 'clearly identify the borrower as the account holder'; 'include at least the last four digits of the account number'; 'include all deposits and withdrawal transactions'; 'include the ending account balance'; 'Purchase transactions'; 'The statements must cover the most recent full two-month period of account activity' · Checked October 17, 2026

4. For Fannie Mae, money in checking, savings and other deposit accounts may be used for the down payment, closing costs and reserves if it is verified; unverified funds are not acceptable, and the lender must investigate any sign of borrowed funds.

   Sources 4 · Selling Guide B3-4.2-02, Depository Accounts (12/14/2022): 'may be used for the down payment, closing costs, and financial reserves'; 'Unverified funds are not acceptable for the down payment, closing costs, or financial reserves'; 'The lender must investigate any indications of borrowed funds' · Checked October 17, 2026

5. For Fannie Mae, a large deposit is a single deposit that exceeds 50% of the total monthly qualifying income; on a purchase, if the money is needed for the down payment, closing costs or reserves, the lender must document that it comes from an acceptable source; if you lack some documents, it must use reasonable judgment; acceptable documentation includes your written explanation, proof that you sold an asset or a wedding invitation supporting gifts; and the undocumented part is subtracted from your funds.

   Sources 4 · B3-4.2-02, 'Evaluating Large Deposits': 'A large deposit is defined as a single deposit that exceeds 50% of the total monthly qualifying income for the loan'; 'the lender must document that those funds are from an acceptable source'; 'the lender must use reasonable judgment based on the available documentation'; 'Examples of acceptable documentation include the borrower's written explanation, proof of ownership of an asset that was sold, or a copy of a wedding invitation to support receipt of gift funds'; 'Verified funds must be reduced by the amount (or portion) of the undocumented large deposit' · Checked October 17, 2026

6. For Fannie Mae, if the source of a large deposit is printed on the statement, such as a payroll direct deposit, Social Security, a tax refund or a transfer between verified accounts, the lender does not need further explanation; and with a verification of deposit that shows no activity, it must verify the source of funds in accounts opened within the last 90 days.

   Sources 4 · B3-4.2-02, Note: 'such as a direct deposit from an employer (payroll), the Social Security Administration, or IRS or state income tax refund, or a transfer of funds between verified accounts'; 'the lender does not need to obtain further explanation or documentation'; 'Request for Verification of Deposit': 'accounts opened within the last 90 days of the application date' · Checked October 17, 2026

7. For Fannie Mae, cash-on-hand is not an acceptable source of funds for the down payment or closing costs, except on HomeReady loans.

   Sources 5 · Selling Guide B3-4.3-20, Anticipated Savings and Cash-on-Hand: 'Cash-on-hand is not an acceptable source of funds for the down payment or closing costs'; 'For HomeReady mortgages, cash-on-hand may be considered an acceptable source of funds for the down payment and closing cost' · Checked October 17, 2026

8. On a Fannie Mae HomeReady loan for a one-unit home, cash-on-hand may be used for the down payment, closing costs and prepaid items, but not for reserves; the lender must verify that you customarily pay expenses in cash and that the amount saved fits your past payment practices; the money must be in a financial institution account or an acceptable escrow account at application or at least 30 days before closing; you sign a statement giving the source of the funds and saying they were not borrowed; and your credit report and other verifications should show limited or no use of credit and limited or no banking relationship.

   Sources 6 · Selling Guide B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements (11/05/2025), 'Cash-on-Hand': 'Lenders may deliver purchase money mortgages for one-unit properties with cash-on-hand as an acceptable source of funds'; 'Cash-on-hand may not be used to fund the borrower's reserve requirement'; 'The borrower customarily uses cash for expenses'; 'exist in a financial institution account or an acceptable escrow account'; 'Funds must be on deposit at the time of application, or no less than 30 days prior to closing'; 'discloses the source of funds and states that the funds have not been borrowed'; 'limited or no use of credit and limited or no depository relationship' · Checked October 17, 2026

9. According to Fannie Mae, HomeReady is a conventional loan with underwriting flexibilities for borrowers who meet specific income criteria: to be eligible, the total annual qualifying income of all borrowers may not exceed 80% of the area median income (AMI) where the home is.

   Sources 7 · Selling Guide B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility (06/04/2025): 'a conventional community lending mortgage that offers underwriting flexibilities to qualified borrowers who meet specific income criteria'; 'the lender must count the income from all borrowers who will sign the note'; 'the total annual qualifying income may not exceed 80% of the AMI for the property's location' · Checked October 17, 2026

10. On an FHA loan, cash on hand is cash you keep outside a financial institution; the lender must verify that it is deposited in a financial institution or held by the escrow or title company; it must get your explanation of how you saved it and how long it took; and it must decide whether that is reasonable given the time, your income, your spending habits, your documented expenses and your history of using banks.

    Sources 10 · HUD Handbook 4000.1 (last revised 8/12/2026), II.A.4.d.iii(B), Cash on Hand (TOTAL): 'Cash on Hand refers to cash held by the Borrower outside of a financial institution'; 'is deposited in a financial institution or held by the escrow/title company'; 'describing how the funds were accumulated and the amount of time it took to accumulate the funds'; 'determine the reasonableness of the accumulation'; 'income stream'; 'spending habits'; 'documented expenses'; 'history of using financial institutions' · Checked October 17, 2026

11. On an FHA loan, the lender must verify your checking and savings accounts; for each deposit of more than 50 percent of your total monthly effective income it must get documentation, and it must verify that you took on no debt to raise part or all of your minimum down payment.

    Sources 10 · II.A.4.d.iii(A), Checking and Savings Accounts (TOTAL): 'The Mortgagee must verify and document the existence of and amounts in the Borrower's checking and savings accounts'; 'For individual deposits of more than 50 percent of the total monthly Effective Income, the Mortgagee must obtain documentation of the deposits'; 'no debts were incurred to obtain part, or all, of the MRI' · Checked October 17, 2026

12. On an FHA loan, the lender must document all funds used to qualify for or close the loan, and verify that you have enough funds from an acceptable source.

    Sources 10 · II.A.4.d.i(B), Cash to Close (TOTAL): 'The Mortgagee must document all funds that are used for the purpose of qualifying for or closing a Mortgage'; 'sufficient funds from an acceptable source to facilitate the closing' · Checked October 17, 2026

13. On an FHA loan, the lender must verify the amount and source of the earnest money deposit if it exceeds 1 percent of the sales price or is excessive for your history of saving, for example with your canceled check, a certification from whoever holds the deposit or a statement showing your average balance covered it.

    Sources 10 · II.A.4.d.i(A), Earnest Money Deposit (TOTAL): 'if the amount of the earnest money deposit exceeds 1 percent of the sales price or is excessive based on the Borrower's history of accumulating savings'; 'a copy of the Borrower's canceled check'; 'certification from the deposit-holder acknowledging receipt of funds'; 'showing that the average balance was sufficient to cover the amount of the earnest money deposit' · Checked October 17, 2026

14. For Fannie Mae, the earnest money deposit can be used for the down payment and closing costs; if it counts toward your minimum contribution, your statements must show your average balance for the past two months was large enough to cover it; large deposits or deposits above what is customary for the area are closely evaluated; and receipt is verified with your canceled check or a written statement from whoever holds the deposit.

    Sources 8 · Selling Guide B3-4.3-09, Earnest Money Deposit (05/04/2022): 'is an acceptable source of funds for both the down payment and the closing costs'; 'Bank statements must evidence that the average balance for the past two months was large enough to support the amount of the deposit'; 'Large earnest money deposits and deposits that exceed the amount customary for the area should be closely evaluated'; 'Receipt of the deposit must be verified by either a copy of the borrower's canceled check or a written statement from the holder of the deposit' · Checked October 17, 2026

15. On an FHA loan, a private savings club is a non-traditional way of saving by making deposits into a pool managed by its members; the lender may accept funds the club paid out to you if it verifies when the club started and how long it has run, that you received the money and that it was reasonably saved and not borrowed, using the club's ledgers and receipts and a statement from the club treasurer that the club is still active.

    Sources 10 · II.A.4.d.iii(E), Private Savings Clubs (TOTAL): 'a non-traditional method of saving by making deposits into a member-managed resource pool'; 'Private Savings Club funds that are distributed to and received by the Borrower as an acceptable source of funds'; 'the establishment and duration of the club'; 'reasonably accumulated, and not borrowed'; 'the club's account ledgers and receipts, and a verification from the club treasurer that the club is still active' · Checked October 17, 2026

16. For Fannie Mae, money from a community savings fund or other pooled savings may be used for the down payment if you document regular contributions, with written confirmation from whoever manages the fund; and if you still have to keep contributing, that obligation counts as debt in your debt-to-income ratio.

    Sources 9 · Selling Guide B3-4.2-04, Pooled Savings (Community Savings Funds): 'Funds from a community savings account or any other type of pooled savings may be used for the down payment if the borrower can document regular contributions to the fund'; 'written confirmation from the party managing the pooled savings fund'; 'The borrower's obligation to continue making contributions to the fund must be considered as part of the borrower's debt' · Checked October 17, 2026

17. On an FHA loan, cash on hand is not an acceptable source of a donor's gift funds.

    Sources 10 · II.A.4.d.iii(F), Gifts (Personal and Equity) (TOTAL), (b) Donor's Source of Funds: 'Cash on Hand is not an acceptable source of donor gift funds' · Checked October 17, 2026

18. According to FinCEN, federal law requires financial institutions to report cash transactions over $10,000 by one person, or several that add up to more than that in a single day, on a Currency Transaction Report (CTR); there is no general prohibition against handling large amounts of cash and the report is filed regardless of the reason; and it is a crime to break transactions into smaller amounts to evade that report.

    Sources 11 · Notice to Customers: A CTR Reference Guide: 'Federal law requires financial institutions to report currency (cash or coin) transactions over $10,000'; 'currency transactions that aggregate to be over $10,000 in a single day'; 'These transactions are reported on Currency Transaction Reports (CTRs)'; 'There is no general prohibition against handling large amounts of currency'; 'the filing of a CTR is required regardless of the reasons for the currency transaction'; 'Federal law makes it a crime to break up transactions into smaller amounts for the purpose of evading the CTR reporting' · Checked October 17, 2026

19. According to the FDIC, deposit insurance protects your money in deposit accounts at FDIC-insured banks if the bank fails, to at least $250,000 per depositor, per ownership category, at each insured bank; safe deposit boxes and their contents are not covered.

    Sources 12 · Understanding Deposit Insurance: 'FDIC deposit insurance protects your money in deposit accounts at FDIC-insured banks in the event of a bank failure'; 'insuring deposits to at least $250,000 per depositor, per ownership category at each FDIC-insured bank'; 'Not Covered'; 'Safe deposit boxes or their contents' · Checked October 17, 2026

20. According to the IRS, gig and side-job income must be reported on a tax return even if it is part-time or temporary, even if it does not come on a 1099 or W-2, and even if you are paid in cash.

    Sources 13 · Gig economy tax center, 'Gig economy income is taxable': 'You must report income earned from the gig economy on a tax return, even if the income is'; 'From part-time, temporary or side work'; 'Not reported on an information return form'; 'Paid in any form, including cash, property, goods, or virtual currency' · Checked October 17, 2026

21. On an FHA loan, the lender may only consider income that is legally derived and, when required, properly reported as income on your tax returns.

    Sources 10 · II.A.4.c.i, General Income Requirements (TOTAL): 'The Mortgagee may only consider income if it is legally derived and, when required, properly reported as income on the Borrower's Tax Returns' · Checked October 17, 2026

22. Under Regulation Z, the lender must verify the income or assets it relies on with reasonably reliable third-party records; examples include copies of your tax returns, financial institution records, receipts from check cashing services and receipts from money transfer services.

    Sources 14 · 12 CFR §1026.43(c)(4): 'using third-party records that provide reasonably reliable evidence of the consumer's income or assets'; 'Copies of tax returns the consumer filed with the IRS or a State taxing authority'; 'Financial institution records'; 'Receipts from the consumer's use of check cashing services'; 'Receipts from the consumer's use of a funds transfer service' · Checked October 17, 2026

23. According to the IRS, the VITA and TCE programs offer free basic tax return preparation to people who qualify; each site may set its own income limit; they serve, among others, limited English-speaking taxpayers; and you find a site with the VITA Locator Tool or at 800-906-9887.

    Sources 15 · Free tax return preparation for qualifying taxpayers: 'offer free basic tax return preparation to qualified individuals'; 'individual VITA sites may establish their own'; 'Limited English-speaking taxpayers'; 'use the VITA Locator Tool or call 800-906-9887' · Checked October 17, 2026

24. HUD-approved housing counselors give independent advice on buying a home, renting, defaults and credit, often at little or no cost.

    Sources 16 · Find a Housing Counselor: 'Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'they can offer independent advice, often at little or no cost to you' · Checked October 17, 2026